New Economy Project respectfully submits the following testimony regarding the oversight of MyCity. Since 1995, New Economy Project has worked with community groups and low-income New Yorkers to combat systemic discrimination and racial wealth extraction in our financial system and economy; and to promote public banking, worker and financial cooperatives, community land trusts, and other democratically controlled initiatives that democratize our economy, advance racial equity, and build collective community wealth.
Our testimony focuses on the MyCity digital wallet and is based on our decades of work with grassroots groups and low-income New Yorkers to address persistent bank redlining, predatory lending, and banking inequality in New York. Our accomplishments include organizing broad-based coalitions and campaigns that have successfully kept payday lending and other debt traps out of New York State, ended employment discrimination based on credit history here in New York City, and won passage of state legislation combating predatory lending and abusive debt collection. We secured funding for the country’s first state-based fund for CDFIs and supported the creation of New York City’s municipal ID program, among other strategies to expand fair banking access for low-income, undocumented, and other underserved New Yorkers. We provide free legal assistance to thousands of low income, immigrant and older New Yorkers each year, through our NYC Financial Justice Hotline, and we have brought impact litigation against banks, debt buyers, and other actors, obtaining hundreds of millions of dollars in monetary awards and other relief for New Yorkers.
We are deeply concerned about, and strongly oppose, the City’s plan to partner with a financial technology (or fintech) firm to create and promote a so-called “digital wallet” on the MyCity platform, through which the City would pay government workers and benefits recipients. This plan threatens to centralize benefits into a single digital platform, giving government agencies excessive control and enabling intrusive monitoring over how New Yorkers spend their money. In fact, the Administration has been open about its desire to use the digital wallet to track users’ purchasing habits.1 This type of surveillance raises alarming concerns around privacy, autonomy, and government overreach.
In 2018, our organization joined with dozens of others to defeat the de Blasio administration’s plan to embed a financial technology “smart chip”–a technology that would have enabled financial transactions and stored personal data–into IDNYC identification cards, exposing immigrant, unhoused and other New Yorkers to serious surveillance, privacy, and consumer protection risks.2 At the time, the financial technology company Mobility Capital Finance, Inc. (“MoCaFi”) was reportedly the City’s planned vendor for the initiative.3 MoCaFi has since been awarded a no-bid contract for the MyCity initiative and is managing the city’s Immediate Response Cards for asylum seekers.
The MyCity portal and digital wallet would similarly facilitate an unprecedented amount of data collection about New Yorkers seeking city services–exposing them to privacy, surveillance, data exploitation, and financial risks.4 The Council must ensure that robust and transparent safeguards are in place to address these serious risks, particularly in light of the Procurement Policy Board’s recent rule change, which makes an already opaque process for approving demonstration projects even less transparent and accountable. Absent such protections, the Council must take measures to curtail this project. We call on the City Council to use all available powers, including its legislative and oversight authority, to fully investigate these issues and ensure that any future actions regarding MyCity are undertaken with full transparency, accountability, and public input—core principles that New Yorkers expect from their government.
We share the concerns raised by others testifying today regarding MyCity and the risks associated with data collection and surveillance under the guise of interagency coordination. While interagency data sharing can facilitate the delivery of services, MyCity risks turning sensitive personal information, such as mental health or substance abuse records, into tools of surveillance by law enforcement, especially given the increasing role of the NYPD within civilian agencies.5 These concerns, already significant, have been further underscored by the recent indictment of Mayor Adams and allegations of corruption in the city’s procurement process.6
Risks of Data Exploitation in Fintech Partnerships
The MyCity initiative is ostensibly designed to integrate financial services with various city programs, including benefits disbursement through a digital wallet administered by MoCaFi through its relationship with Sunrise Banks.7
It is worth underscoring that the Banking Commission has not designated Sunrise Banks to hold city funds or provide banking services to New York City.8 This arrangement raises profound risks, particularly concerning surveillance and data privacy of New Yorkers, including undocumented residents, who are likely to be disproportionately affected by these issues.9
The business model of financial technology companies like MoCaFi is predicated on extensive data maximization, a practice where large amounts of personal and financial information are collected, stored, and potentially shared across various platforms.10 In this case, MyCity’s integration of a digital wallet with an array of city services means that a wealth of sensitive information—including financial history, social security numbers, and transaction data—may be concentrated in one system.11 This raises significant concerns about data security, breaches, and unauthorized access.
Indeed, the MoCaFi contract includes concerning language that diverges from the city’s standard terms, particularly when it comes to data privacy and ownership.12 While the city’s typical contract language prohibits the sale or monetization of sensitive information, the MoCaFi contract grants the company broad rights to modify and distribute data collected through its online platform.13 This means that New Yorkers’ personal data could be shared with third parties, without their consent or knowledge, undermining their privacy and security.
Financial technology firms also rely heavily on information networks, including data brokers and consumer reporting agencies.14 This creates the risk of an unwieldy, unmanageable data ecosystem, where the sheer volume and interconnectedness of personal data could lead to a Pandora’s box of privacy concerns and systemic misuse. The Surveillance Resistance Lab has highlighted that the accumulation of data across these networks increases the risk of systemic privacy violations, potentially amplifying existing disparities in policing and surveillance, particularly in low-income communities and communities of color.15 This dynamic raises significant concerns about how these platforms will handle data responsibly, particularly in a large-scale initiative like MyCity.
For example, the MoCaFi platform reportedly allows users to build credit by reporting their rental payments through major credit bureaus like Equifax and TransUnion.16 However, this data, once collected, is sold to lenders and other third parties, including potentially problematic entities. For instance, Equifax and TransUnion sell bulk credit data to U.S. Immigration and Customs Enforcement (ICE) via subscription contracts.17 Additionally, utilities data, part of the National Consumer Telecom & Utilities Exchange (NCTUE) operated by Equifax, is shared through databases like CLEAR, provided by Thomson Reuters, which is also accessible by ICE and other law enforcement agencies.18 This widespread data sharing disproportionately impacts over-policed communities, increasing the risks of surveillance and exploitation, particularly for undocumented New Yorkers.
Concerns About MoCaFi’s Banking Partner: Sunrise Banks
MoCaFi’s relationship with Sunrise Banks raises similar concerns. Fintech companies partner with banks like Sunrise Banks because, as non-banks, they lack the authority to hold deposits or offer key regulated financial services.19 These partnerships allow fintechs to circumvent strict banking regulations while accessing the financial infrastructure necessary to issue products like debit cards or digital wallets.20 This creates regulatory loopholes that enable fintechs to exploit people and communities and blur accountability between the fintech and its banking partner. Fintech products are often associated with predatory fees, privacy violations, and weak consumer protections—which disproportionately harm low-income and Black, brown and immigrant communities.
Sunrise Banks, itself, has a history of regulatory concerns, including a 2010 consent order issued by the Federal Deposit Insurance Corp. (FDIC) for operational failings related to management, oversight, and loan portfolios.21 In 2011, the bank stopped allowing U.S.-based Somali users from transferring funds to family members in Somalia during a humanitarian crisis.22 Additionally, legal services organizations have frequently represented people in claims against Sunrise Banks for issues ranging from unauthorized transactions to excessive charges, citing violations of EFTA and Regulation E.23
In 2018, formerly incarcerated California residents filed a class-action lawsuit against Sunrise Banks over high-fee debit release cards.24 The lawsuit claimed that Sunrise Banks, in partnership with JPay, engaged in profiteering by forcing these cards on individuals upon release from incarceration. The cards came with multiple fees, including monthly maintenance fees, fees for frozen accounts, and charges for canceling the card or receiving funds by check or money order. In October 2021, the Consumer Financial Protection Bureau (CFPB) penalized JPay for similar practices, finding that they violated federal law by charging consumers to access their own government benefits via prepaid debit cards.25 This included a violation of tthe Electronic Funds Transfer Act (EFTA).
Critically, we are concerned that Sunrise Banks, through its relationship with MoCaFi, is effectively holding city funds despite not having gone through the standard oversight and approval process required by the NYC Banking Commission.26 Given Sunrise Banks’ past issues, including legal actions and regulatory scrutiny, the lack of formal designation raises important questions about transparency, due diligence, and financial safeguards.
Lack of Transparency in Procurement Process
The MyCity program, along with the prepaid Immediate Response Cards (IRCs) for migrants, have also raised serious concerns regarding the lack of transparency in the city’s procurement process. These contracts were awarded without the benefit of standard competitive practices, such as public requests for proposals (RFPs) or thorough vetting processes, effectively sidelining the opportunity for community input and oversight.27
MoCaFi’s prepaid IRC and digital wallet contracts were awarded through emergency or expedited procurement procedures, which bypassed the usual checks and balances that exist to ensure public accountability and fiscal responsibility. For example, they were not subject to typical pre-solicitation reviews, public contract hearings, or vendor protests—all of which are critical to ensuring transparency and safeguarding against potential conflicts of interest.
No-bid contract procurement often results in higher costs and greater risks.28 For example, New York City Comptroller Brad Lander has repeatedly warned that emergency contracts typically end up costing more than those procured through competitive processes, without delivering the expected transparency or oversight.29 In the case of MyCity, these concerns are amplified by the fact that the procurement process avoided essential risk assessments and equity considerations, which could have otherwise revealed the potential pitfalls and long-term consequences of partnering with fintech companies like MoCaFi.30
The use of emergency or expedited contracts should be limited to urgent situations where there is no time to solicit competitive bids, yet the city’s actions suggest that these contracts were rushed through unnecessarily. The prepaid IRC contract, for instance, was awarded for a one-year term, generating an estimated $1.8 million in revenue for MoCaFi.31 This significant financial commitment, made without meaningful oversight, calls into question the city’s priorities when managing public resources.
By circumventing the standard procurement process, the administration has effectively shut out community voices and excluded public input from critical decisions affecting New Yorkers. The involvement of financial technology companies, which routinely seek to operate outside traditional banking regulations, should have warranted an even more cautious and transparent process. Instead, decisions were made behind closed doors, diminishing the public’s trust in the process and in the MyCity initiative as a whole.
Fintechs Exacerbate Banking Inequality
One of the administration’s justifications for the MyCity initiative has been the promise to expand access to city and financial services, particularly for historically redlined communities.32 However, a closer analysis of the MyCity proposal, and its reliance on partnerships with fintech companies like MoCaFi, reveals that the initiative will not provide the robust, equitable financial inclusion New Yorkers deserve. Research and past experiences show that digital-only financial solutions, such as the proposed MoCaFi digital wallet, fail to meet – and often exploit – unmet needs in communities where barriers to financial inclusion are deeply structural.33 Despite the fintech industry’s lofty rhetoric around financial inclusion and equity, their products ultimately serve to reinforce a separate and unequal banking system.
Low-income callers to our NYC Financial Justice Hotline who have used fintech products to receive benefits and access funds routinely report significant problems receiving statements, accessing and transferring funds, and reporting and receiving redress for fraud—notwithstanding clear EFTA protections in place to prevent and curtail these abuses. Furthermore, without careful attention to how the digital wallet and user accounts are structured, New Yorkers risk falling outside the scope of critical EFTA protections when fintech products like digital wallets are opaque, complex, and involve multiple parties. We are alarmed that New Yorkers could be steered to a digital wallet without ensuring they would retain these vital consumer protections.
Fintech companies, such as MoCaFi, generally lack adequate regulatory oversight and routinely evade or flout consumer protection laws.34 Fintech products are typically characterized by high and hidden fees, data extraction, and limited consumer recourse in the event of disputes—all of which disproportionately affect low-income communities and communities of color. These companies invariably focus on maximizing profits at the expense of the public interest. When governments contract with fintechs for public services, it enables this profit-driven approach to erode the integrity of those services and undermines broader public policy objectives. In the case of MyCity, these partnerships risk undermining public trust and uptake of city services.
Finally, fintech lenders often rely on algorithmic decision making to evaluate creditworthiness, a practice that has been widely criticized for perpetuating racial and economic biases.35 Algorithms trained on historical financial data reinforce existing inequalities, further harming Black, brown, and low-income applicants.36 By partnering with fintech companies like MoCaFi, the city risks perpetuating discriminatory lending practices, which contradict the very goal of financial inclusion that the MyCity program claims to pursue.
Conclusion
New York City is a banking capital of the world, and billions of municipal dollars move through banks each year. New York is also home to some of the strongest community development financial institutions (CDFIs) in the country, including community development credit unions that equitably serve low-income and immigrant New Yorkers and communities of color. New York City and State enforcement agencies have historically been national leaders in promoting responsible lending, cracking down on unfair and abusive industries and practices, and keeping payday and other forms of predatory lending out of our state, working closely with financial justice, labor, and civil rights advocates and coalitions. The administration and Council should work with these and other stakeholders to craft solutions to bank redlining that address root causes and ensure equitable access to financial services for all New Yorkers. We urge the administration and Council, for example, to support public banks and CDFIs that serve historically-redlined Black, brown, and immigrant communities with high-quality, responsible financial services.
The City Council must take the risks associated with the current MyCity initiative seriously and use all its legislative and oversight powers to ensure that MyCity does not become a platform that deepens financial exclusion, violates privacy, or allows surveillance to harm New Yorkers in need of support.
Thank you for the opportunity to testify.
1 Nicholas Liu, How the Administration is Thinking About Blockchain and Cryptocurrency, Gotham Gazette (May 17, 2023)
2 Public Comment, Letter to Mayor Bill de Blasio on Proposal to Add Financial Technology to IDNYC Cards (Oct. 2, 2019)
3 Surveillance Resistance Lab, Testimony on Challenge Based Procurement Reform Testimony (Aug. 28, 2024)
4 What’s in Your Digital Wallet? A Review of Recent Trends in Mobile Banking and Payments: Hearing Before the Task Force on Financial Technology of the H. Comm. on Fin. Services, 117th Cong. Sess. 2 (2022) [hereinafter Hearing] (statements of Raul Carrillo, Associate Research Scholar, Yale Law School, and Deputy Director, Law And Political Economy Project & Kia Mcallister-Young, Director, America Saves, Consumer Federation of America)
5 Katie Honan et al., NYPD Expands Role in Civilian Agencies as Feds Circle Top Cops, The City (Sept. 11, 2024)
6 See Office of the New York City Comptroller Brad Lander, Preventing Corruption in Procurement, Bureau of Policy and Org. & Bureau of Cont. Admin. (Sept. 2024) (“Amidst federal investigations reportedly looking into City procurement, and three years after a DOI report that called for prompt action, this is a critical moment for systemic procurement reform”)
7 mocafi.com (“MoCaFi is a financial technology company and not a bank. Banking services are provided by Sunrise Banks N.A.”).
8 New York City Designated Banks List (as of May 9, 2024)
9 Hearing, supra note 4.
10 Hearing, supra note 4 (statement of Raul Carrillo, Associate Research Scholar, Yale Law School, and Deputy Director, Law And Political Economy Project).
11 See. e.g., Section 6.2, Services Agreement between the City of New York’s Department of Housing Preservation and Development and Mobility Capital Finance, Inc. (2023) (page 3)
12 Appendix EX (Exceptions to Appendix A), Services Agreement between the City of New York’s Department of Housing Preservation and Development and Mobility Capital Finance, Inc. (2023) (page 89)
13 Privacy Policy, Services Agreement between the City of New York’s Department of Housing Preservation and Development and Mobility Capital Finance, Inc. (2023) (pages 166–72)
14 Mizue Aizeki & Rashida Richardson, eds., Smart-City Digital ID Projects: Reinforcing Inequality and Increasing Surveillance through Corporate “Solutions”, New York, NY: Immigrant Defense Project (Dec. 2021).
15 Id.
16 Supra note 13, at 24
17 Id.
18 Id.
19 See e.g., Joint Statement on Bank’s Arrangements with Third Parties to Deliver Deposit Products, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency (July 25, 2024)
20 Id.
21 Mike Allen, Sunrise Bank Operating in Unsafe Manner, Federal Regulators Say, San Diego Business Journal (June 6, 2010)
22 Somalia fears as US Sunrise banks stop money transfers, BBC (Dec. 30, 2011)
23 See e.g., Consumer Fraud Legal Services LLP, “Sunrise Banks”
24 Dena Aubin, Minnesota bank, card company sued over ex-inmate debit cards, Reuters (Jan. 16, 2018)
25 JPay, LLC, CFPB No. 2021-CFPB-0006 (Oct. 19, 2021)
26 Every bank must be designated in order to “hold deposits” of City money. N.Y.C. Admin. Code tit. 22 § 1-03.
27 Office of the New York City Comptroller Brad Lander, Rethinking Emergency Procurements: A Roadmap to Efficiency and Accountability, Bureau of Cont. Admin. (Nov. 2023)
28 The administration has consistently struggled with the implementation of technological initiatives, as seen in the MyCity rollout. One glaring example is the MyCity chatbot, which was criticized for providing misleading and potentially illegal advice to users, raising concerns about the oversight and reliability of these systems. See NYC mayor defends its chatbot pilot, as the AI tool continues to dish out illegal advice, Reuters, (Apr. 5, 2024)
29 Id.
30 Digital technology experts have voiced broad criticism of the initiative’s direction, particularly its heavy reliance on outsourcing to external vendors. This approach has led to significant cost overruns and inefficiencies, further highlighting the administration’s inability to effectively manage and execute large-scale digital projects. See Samar Kurshid, Civic Tech Experts Question Mayor Adams’ Decision to Contract Out Signature ‘MyCity’ Portal, Gotham Gazette (May 17, 2023)
31 Mymoena Davids, Controversy Surrounds NYC’s $53M Migrant Debit Card Deal, Lack of Bidding Process Under Scrutiny, Little Africa News (Feb. 27, 2024)
32 Contract Notification/Scope Extract between the City of New York’s Dep’t. of Info. Tech. and Telecomm. & Mobility Capital Finance, Inc.
33 See Lindsay Sain Jones & Goldburn P. Maynard, Jr., Unfulfilled Promises of the Fintech Revolution, 111 CAL. L. REV. 801 (2023)
34 Id.
35 Nicole Turner Lee et al, Algorithmic bias detection and mitigation: Best practices and policies to reduce consumer harms, The Brookings Institution (May 22, 2019)
36 Id.